All salaried employees and taxpayers want to make some investments for minimizing taxes. But they actually don’t have adequate knowledge of the available options.

Here are some useful tax-saving tips to help taxpayers save money and reduce taxes:
1. Restructure the Salary

This option is not always possible. But if a company allows you to do so, you may consider restructuring certain components of your salary for reducing your tax liability.

For instance,
  • Opt for food coupons rather than lunch allowances.
  • Make use of medical allowance, education allowance, transport allowance and telephone expenses, which are part of the salary. This will actually help you in tax reduction and saving more money.
  • If there is an option, opt for company car rather than buying your own car to reduce taxes.

2. House Rent Allowance

Ask the company for the house rent allowance under Section 80GG. The house rent allowance helps you in deducting taxes. However, this deduction is not allowed if the residential accommodation is owned by your spouse.

3. Make Use of Section 80C

According to Section 80C of income tax act, the maximum deduction of INR 100,000 is allowed. Utilize this section for investing in the following options:

  • Life Insurance Premium
  • Public Provident Fund
  • Equity Linked Savings Scheme
  • National Savings Certificate
  • 5 year fixed deposits at the post office or bank

4. Home Loans for Tax Savings

Acquire home loan to save tax efficiently. Under section 80C, home loan deduction is allowed for up to INR 100,000. Moreover, the interest is offered for deducting of approximately INR 150,000 separately.

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